Thursday, July 30, 2009

You should only spend FOUR hours per month managing your finances.

Look at this graphic -- in the next couple of weeks, I'm going to show you how to automate your money so you build a bulletproof personal-finance system like this: -Automation is the key to getting there. It lets you focus on the big wins and gets you beyond the day-to-day management so you can earn more, travel, and hang out with friends and family, guilt-free.
Personal finance is not about more willpower and yet people constantly fall prey to the "Try Harder" fallacy: "If I just try harder, I can save more money!!" Yet they never stop to ask themselves one question: Has this worked over the last year? 2 years? 5 years? The "try harder" strategy is similar to diets...and we know how those end up.

But there's a better way

In one excellent study, researchers were able to cause 401(k) contributions to soar from under 40% to over 90% with a simple change: They made enrollment automatic.
We all know money is important, but most of us don't even take the simplest step of contributing to our 401(k)...even though there are HUGE financial benefits. But using automation, you can start to dominate by having your system passively do the right thing for you.
A reader named Josh G. wrote me about using an automated financial system:
"I just wanted to drop you an email and personally thank you for teaching me about automated savings. I am saving 12k a year! I have saved 14k so far since I started May 2008 and I'm on track for 20k by the end of the year! Fear kept me from automating my savings previously. I had bills and it seems that was all I thought about every month."
Back to your friends. While they're busy trying harder (which invariably wears off after a few weeks), you'll be building an automated system that will help you manage your money, guilt-free, for years to come. Bills, payments, and even investments will be automated, leaving you to focus on the things that really matter. And since the system I've built is so flexible, you can tweak it to your specific situation.
Even better, automation can save you from making big financial mistakes. For example, if you miss just 1 credit card payment, your credit score can drop 100 points, your interest rate can soar to 30% -- and the worst part is, this can happen on multiple cards, not just the one you were late on.
Ghanaian Reactor Online brings you more on automation later.

No comments: